Managerial Economics

Syllabus

Textbook: Managerial Economics & Business Strategy, Tenth Edition (2022) by Michael Baye and Jeff Prince



	Chapter
The Fundamentals of Managerial Economics	1
Market Forces: Demand and Supply	2
Quantitative Demand Analysis	3
The Theory of Individual Behavior	4
The Production Process and Costs	5
Introduction to Linear Programming	6
The Nature of Industry	7
Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets	8
Basic Oligopoly Models	9
Game Theory: Inside Oligopoly	10

Reading List:

Chapter 1 – Fundamentals of Managerial Economics

Robert Litan, “What an Economist Brings to a Business Strategy,” Harvard Business Review, September 29, 2014.
- What are some of the areas in which economics applies? List five.
- What was Mr. Jay Walker’s (Priceline’s founder) innovation?
- How was economics used by Cupid.com to solve the problem of women being flooded with roses (requests for dates)?
Paul Oyer, “Eminent professors explain their subjects” The Economist, retrieved December 1, 2019, https://www.economist.com/whichmba/subject-matters-economics
- Why does the author believe economics is an important component of a curriculum, for example, core MBA curriculum?
- What do economists at business schools do? List three functions outlined by the author.
- What economic lessons have been learned from the Great Recession from (a) a micro perspective and (b) macro perspective?

Chapter 2 – Market Forces: Demand and Supply

The Economist “How supply can create its own demand,” The Economist, September 20, 2017
- Which economist said “if you build it, they would come”?
- What is Say’s Law?
- What are two limitations to Say’s Law?
- What are the effects of overproduction in terms of resource (mis)allocation?
Vincent H. Smith “Opinion: Amid rising demand for Beyond Meat burgers, U.S. farmers can’t solve this supply problem,” Market Watch, October 5, 2019.
- What supply problem are farmers facing?
- What is the market value of the U.S. meat market?
- How long does it take to convert land that produces non-organic crops to land on which organic crops can be raised?

Chapter 3 – Quantitative Demand Analysis

James Walker, “Price Elasticity Has Snapped,” Strategy+Business, August 20, 2014.
- According to the author, what are the four reasons that make the concept of price elasticity obsolete?
- What types of questions should these pricing models help managers answer? List three.
- What are the author’s recommendations about replacing the price elasticity of demand (PED)?

Eliana Eitches and Vera Crain, “Using gasoline data to explain inelasticity,” Beyond the Numbers: Prices & Spending, 5, no. 5 (U.S. Bureau of Labor Statistics, March 2016)
- Why doesn’t gasoline follow the pattern of elastic goods?
- Why do Tobacco products exhibit price inelasticity of demand, according to the authors?
- Is Chart 1 consistent with the Law of Demand?

Chapter 5 – The Production Process and Costs

The Economist “Why do firms exist?” The Economist, Sep 18 2017
- What was Ronald Coase’s critique to Adam Smith’s “Invisible Hand” metaphor?
- What’s the author’s answer to why firms exist?
- What is a drawback of spot-like job contracts?

Elliot Schrage “Supply and the Brand,” Harvard Business Review, June 2004 Issue.
- What is sustainable sourcing?
- What is the main complaint of critics of global companies?
- As part of the preferred supplier program, candidates are reviewed on how many measures?

Chapter 6 – Introduction to Linear Programming

James Gleick “Breakthrough in Problem Solving” The New York Times, Nov. 19, 1984
- What is the name of the Bell Labs mathematician referred to in the article?
- According to the article, how useful is LP?
- When was the Simplex Method created?
- How does the new method differ from the Simplex Method?
- Give an example of a problem that can be solved using LP for each of the following companies: American Airlines, AT&T and Exxon.
Dianne Dotson “Five Areas of Application for Linear Programming Techniques” Sciencing, May 21, 2018
- Name the five areas of application of LP in the article.
- How is LP applied in Food & Agriculture?
- How is LP applied in the energy industry?

Chapter 7 – The Nature of Industry

John Stuckey “Enduring Ideas: The SCP Framework” McKinsey & Company, July 2008
- The SCP model dates back to the pioneering work of which economist?
- What was the original purpose of the SCP framework?
- What extension was proposed to the SCP model in the 1980s?
Ryan Young “Antitrust Basics: Misleading Herfindahl-Hirschman Index,” Competitive Enterprise Institute, July 1, 2019
- What is the range for HHI values?
- What value(s) of HHI imply that a market is concentrated?
- What is a flaw inherent to the HHI calculation according to the article? Describe it.

Chapter 8 – Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

William Easterly “‘Good Economics for Hard Times’ Review: Sticky Markets, Tricky Solutions” The Wall Street Journal, November 17, 2019
- What does the author mean when he says markets are sticky?
- How was the stickiness problem in the fishery markets in state of Kerala, India, solved?
- According to the author, why are politicians and voters unlikely to select policies based on what the academics recommend?

Chapter 10 – Game Theory: Inside Oligopoly

Jules Yimga